Financial Mess

Mortgage bank again

Today is an important day. I have been in a four year fight with SunTrust. It seems like they will never learn. The lawsuit that I filed against them in December has been settled. Although the exact terms of the settlement are confidential, I can say that I received a 5 figure settlement. That is the second time that they have paid me 5 figures within the past year. In the settlement, I agreed to hold them harmless for everything that they had done as of the date of the settlement.

The day after the settlement was signed, they again violated the court’s order. I am going to wait a couple of months for them to do it a few more times, and I will sue them again. Sooner or later, they will get the message.

By Divemedic, ago

Law change will cost you

As of today, the Mortgage Forgiveness Debt Relief Act expires, as it was not renewed by Congress. This is a HUGE problem for underwater homeowners. Let me explain:

Underwater homeowners often try to negotiate with their bank so that
they can sell their homes for less than they owe in a short sale or have
their mortgage balance reduced. But the difference between what the
homeowner owes and the lower sales price approved by the bank is
considered income for the homeowner and subject to tax by the Internal Revenue Service.

For example, someone with a $100,000 mortgage who is allowed to sell
their house for $80,000 is supposed to pay taxes on the remaining
$20,000.

But the Mortgage Forgiveness Debt Relief Act saved such homeowners from the tax burden. Last year, Congress rushed to extend the law during negotiations about the fiscal cliff but only through the end of 2013.

They did not do so this year. This means that the IRS will consider a short sale to be INCOME, even though the homeowner took a loss in selling his home for less than what he paid for it.

So let’s say that you borrowed $240,000 for your home in 2007. The bank allows you to short sell it in 2014, and you get $100,000. That $140,000 difference will count as income, and if you are married and each earn around $45,000 a year, you are now considered subject to the taxes that the evil rich must pay. Your tax bill will be about $45,000 higher than it otherwise would.

Hope this doesn’t keep you up at night.

By Divemedic, ago

Good business, if you can get it

The median household income of my county is just about $44,000 a year. That is for a two income household in most cases. That is down from $47,000 just two years ago, which mirrors the nationwide decline of incomes that 35 of the 50 states saw this past year.

Washington, DC doesn’t have that problem. The median income there rose to $88,000- the highest of any metro area in the nation. This is due to the massive growth in the Federal government under the Obama administration, and the lawyers and lobbyists that this growth is bringing to the nation’s capitol.

What makes this trend REALLY disturbing is just how much the size of government is increasing: the poor in DC are getting even poorer, with the number of households making less than 50% below the poverty line increased. The poverty threshold for a family of four that includes two children under 18 was $23,283 in 2012, meaning that to be in deep poverty, that family of four would have to earn less than $11,641 a year.

So in order for median incomes to rise in DC, they have to overcome the increase in poverty, plus increase the median income. Think about that.

This is the Obama that the poor voted for: Blacks have a 27% poverty rate, and yet they vote for the man that put him there, simply because he is black.

By Divemedic, ago

Continuing Shenanigans

For those just joining us:
I had a house that lost its value in the real estate crash. I declared bankruptcy, and was going to turn the house over to the bank. The bank testified in court that they were the owner of the note and the mortgage, but I caught them lying. They had sold the note and mortgage to Fannie Mae, two year earlier. I sued, and we settled out of court for almost 10 grand. They then sold the note and mortgage again, this time to Nationstar mortgage. They recorded the sale in the county clerk’s office.

Then SunTrust tried to foreclose. The foreclosure was dismissed, and Nationstar claimed to not have any record of owning the mortgage.

The feds stepped in and sued the banks. I got another $4,000 in THAT lawsuit.

SunTrust continued to send me demands for payment, even though prohibited from doing so by the bankruptcy court, and the fact that they no longer own the note and mortgage. So after a few years of this, I got tired of it and sued again in May of this year (the hearing was in June). This time, the court awarded me $14,700 and instructed SunTrust to have no further contact with me.

The next day, SunTrust began sending letters and leaving notes on my door. Since that court date in June, I have gotten 2 letters, 5 notes on my door, and two phone calls.

Today, I get a letter from SunTrust, telling me that they have sold my note and mortgage, and effective October 1, 2013, I should send my payments to yet another bank. I am thinking that this is going to be my new career.

Bankruptcy is supposed to allow you to start over. It has been four years, and this bank STILL will not leave me alone.

By Divemedic, ago

Foreclosure scams

A new chapter in the Florida foreclosure mess has opened, as real estate scammers are renting out homes that are to be foreclosed, by posing as the home’s owner. In this case, a pair of cops were arrested for the scheme. This is possible, because it takes years to foreclose a home, thanks to the criminal activity of the banks themselves.

People who are caught up in the fraudulent foreclosure system, where the banks gave loans to people that they knew couldn’t afford them, so that those people could buy homes that were selling for far more than they were worth. The banks then paid appraisers to overstate the homes’ value, and sold the loans off to investors before the first payment was due by calling them mortgage backed securities. The securities were rated as top notch investments by ratings firms, even though they were subprime loans. They created a company called “MERS” to aid in obscuring the fraud by taking mortgage transfers out of the public record and hiding them in a maze of private files.

The homebuyers soon defaulted, crashing the economy, and the entire deck of cards collapsed. The banks moved to foreclose, but had destroyed the paperwork. A savvy lawyer working in Jacksonville discovered the lack of notes and mortgages, and people began fighting the foreclosures. The banks responded by “creating” and forging paperwork. Banks were reportedly calling this the “art department.”

They got caught, and lost quite a bit of money. In February of 2012, several banks came to a settlement with the federal government, where the banks paid $25 billion for wrongfully foreclosing on people’s homes. The agreement settles state and federal investigations finding that the country’s five largest
mortgage servicers routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct.  Both of these practices violate the law. Federal and state governments received the lion’s share of the money, and only $1.5 billion went to reimburse the people whose homes were stolen through this fraud. The politicians are bought and paid for. Of course, the homeowners are still able to pursue their own court actions.

This had the effect of slowing the foreclosure process, because in many cases, the banks cannot prove that the homeowner owes them any money. So now the other scammers move in: people are posing as the homeowner of vacant homes (sometimes the banks themselves), and are renting them out and pocketing the money. It is an added slap in the face that some of the criminals doing this are also the very police that are supposed to prevent that sort of thing.
 

By Divemedic, ago

Cooking the books

I will no longer post about the country’s national debt. That number, as reported by the treasury, is no longer accurate. According to the US treasury, the national debt has remained the same (it is actually about $700 million lower) since May 31, at $16.738 trillion. Are you telling me that the Federal government has not spent any money in the past two months?
The books are either being cooked by changing accounting methods in a way that would have a private sector accountant thrown in jail, or the government is monetizing the debt like nobody’s business, meaning that inflation, and lots of it, is on the horizon.
Either way, those figures are now meaningless.

By Divemedic, ago

Minimum wage again

The Obama administration is talking about a minimum wage hike. The one that has been proposed is a hike to $10.10 an hour, which equates to $21,000 a year. The Federal poverty level for a family of four is $22,320, and for a single person is $10,890. So Obama’s plan will wipe out poverty, right?

Wrong.

Coming on the heels of the massive costs involved with Obamacare, it would cost $12,000 more per year to hire a new worker than it did when Obama took office. Employers are not bottomless pockets full of money. In order to afford these new, higher wages, employers will have to do one of three things: cut costs, raise prices, or a combination of the previous two. Most likely, this will be done as a combination of the previous two. The first effect will be fewer jobs.

The second effect will be pay compression. Let me give an example: In 2004, workers in Florida followed the Federal minimum wage law. The minimum wage in Florida was the same as the Federal wage, $5.15 an hour. In those days, an unskilled position like fry cook at KFC started at about $6.50 an hour. A
semi skilled position, EMT, started at $8 an hour. A
skilled position, Paramedic, started at $14 an hour.

In 2005, the voters of Florida put a law in place that increased the state minimum wage each year. (Here it is – pdf warning) Right now in Florida, an unskilled position like fry cook at KFC starts at about $8 an hour. A semi skilled position, like EMT currently starts about $9 an hour. A skilled position like Paramedic starts at about $13 an hour. So, the minimum wage in Florida increased by $2.64 (a 51% increase) over 7 years, and while the wages of unskilled labor climbed by 23%, the wages of semi-skilled laborers climbed by only 12.5%, and skilled labor actually fell by 7%. Factoring in inflation, and unskilled laborers were the only ones who saw an increase. This is illustrated in this Sentinel article. About three quarters of the way through the article,

Eric Jackson is CEO and president of Total Roofing Services, a
2-year-old Orlando company with about eight employees. Jackson starts
his employees out at $10 an hour, saying he wants to give everyone “a
chance to earn a living wage.”

Jackson said he’s not particularly concerned an increase in the federal
minimum wage would drive up his labor costs. He said he’d tell new
employees, “I’m already paying you a buck above that. Prove yourself,
and you’ll make more.”

So the skilled workers  making more than minimum wage would not make more when the minimum wage is raised, and would be making the same as what a KFC fry cook makes, only now all of the businesses who had to give raises to their employees (KFC, grocery stores, gas stations) charge more. Inflation.

Inflation brings us to the second way that employers react to an increase in labor costs: they raise prices. They pay for the wage increases and the increased costs of providing health insurance by raising prices.

One of the biggest complainers about the minimum wage law is waiters and waitresses. They have a “tipped minimum wage” that is only $2.13 an hour. They claim that this places them below the poverty level. I claim bullshit. I know your game. Waiters and waitresses make HUGE amounts of money, they just don’t claim them. Since much of these wages are “under the table,” unreported income, they appear poor, but my daughter works as a server, and she regularly brings home $200 a night in tips after an 8 hour shift.

A meal for two at a moderately priced restaurant like the Outback or Olive Garden runs about $35, meaning a tip of $4 or more. The average server works 3-5 tables. This translates into $12-20 an hour in tips. For a job that requires no licenses or real skill. All you have to do is write down what the customer wants and carry it to the table. 

By Divemedic, ago

Banks screwing up

For those who may not remember or are new to this blog, I was swept up in the mortgage mess that started our economic downturn. You can read about the summary here. I declared bankruptcy in 2009 as a result. My mortgage bank lied and provided false documents in court, and I was able to prove it. I sued them in Federal Court, and we settled out of court for $7,500. They paid me to go away. Then, in June of 2011, I won the foreclosure case after a year and a half of acting as my own attorney as I fought it in court.

Because no one knows who owns the mortgage, there are three different entities who have a potential claim:

1 The original bank. (Let’s call them Mortgage Trust Company) They are the ones that I beat in court. They claimed to own my mortgage, sold it, filed the assignment with the courthouse, but still claim to be the mortgage holder.
2 Fannie Mae (FNMA) They also claim to be the owner, and they claim that Mortgage Trust Company is acting on their behalf. Like Mortgage Trust Company, they cannot produce a single document to show that they are the owners of the note or mortgage.
3 Nationstar mortgage. There is a recorded document at the courthouse that names Nationstar as the mortgage holder, and it is signed by Mortgage Trust Company’s agent, MERS. The problem here is that Nationstar has no record of this.

Clear as mud? So last year, they started trying to collect money again. So, last month, I filed another lawsuit in Federal Court. This time, I was able to get an attorney. Let’s see how much money we get this time.

I am not alone. In Florida, the banks are still lying and committing fraud to steal people’s homes. This needs to stop, but I am not counting on our corrupt government to stop it. This family has been messing with it for two years:

By Divemedic, ago

Prosper

While I was employed, I invested in a deferred compensation plan called a 457 plan. Similar to a 401K (but for government workers) money is taken out of your pay, pretax, and invested. When the stock market crashed in 2008, I lost more than half of the money that I had invested. Much of it was never recovered. Over $17,000 gone in the blink of an eye. While the market was crashing, I tried desperately to get my money out, to no avail. I had to watch as the amount in there dropped every day. At the same time, the value of my house fell to less than half of what it was worth when I bought it.

Since, I have decided to diversify. I have invested in physical gold, and direct lending. In direct lending, you join a network of people who lend money directly to consumers. As far as I am concerned, this is no different from buying stock, because stock is nothing more than you loaning money to a corporation. Like stock, diversifying your money among several borrowers limits your exposure.

The company that I use for this is Prosper. The way it works is that you open an account, and you look over people who have applied for loans. Prosper has already pulled their credit and verified employment. You then contribute some funds to each loan, and as the person makes payments, you get repaid with interest. Interest paid to you is part of the bidding process. Take a look. It can’t be worse than losing half your money in the market.

By Divemedic, ago

Thanks, suckers

This woman won a million dollars in the lottery. She still collects $200 a month in food stamps. According to her:

Clayton says it’s okay to remain on food stamps because she doesn’t have a source of income and has bills to pay. She also believes she’s entitled to it because she’s “still struggling” and has two homes to run.

What I don’t understand is how she has money for lottery tickets, but is on welfare. If you are so broke that you need to steal other people’s money to survive, how can you have money for gambling? To top it off, you get a half million after taxes, and still need to steal other people’s money.

So remember Ms. Clayton when you are doing your taxes this year. This is what your tax money pays for.

By Divemedic, ago